MyFTB account2018 Instructions for Form FTB 3805V Net Operating Loss (NOL) Computation and NOL and Disaster Loss Limitations — Individuals, Estates, and Trusts
References in these instructions are to the Internal Revenue Code (IRC) as of January 1, 2015, and the California Revenue and Taxation Code (R&TC).
What's New
Federal Tax Reform
The Tax Cuts and Jobs Act (TCJA) signed into law on December 22, 2017, made changes to the Internal Revenue Code (IRC). In general, California Revenue and Taxation Code does not conform to the changes. California taxpayers continue to follow the IRC as of the specified date of January 1, 2015, with modifications.
General Information
In general, for taxable years beginning on or after January 1, 2015, California law conforms to the Internal Revenue Code (IRC) as of January 1, 2015. However, there are continuing differences between California and federal law. When California conforms to federal tax law changes, we do not always adopt all of the changes made at the federal level. For more information, go to ftb.ca.gov and search for conformity. Additional information can be found in FTB Pub. 1001, Supplemental Guidelines to California Adjustments, the instructions for California Schedule CA (540 or 540NR), and the Business Entity tax booklets.
The instructions provided with California tax forms are a summary of California tax law and are only intended to aid taxpayers in preparing their state income tax returns. We include information that is most useful to the greatest number of taxpayers in the limited space available. It is not possible to include all requirements of the California Revenue and Taxation Code (R&TC) in the instructions. Taxpayers should not consider the instructions as authoritative law.
For taxable years beginning in 2010 and 2011, California suspended the NOL carryover deduction. Taxpayers continued to compute and carryover NOLs during the suspension period. However, taxpayers with a modified adjusted gross income of less than $300,000 or with disaster loss carryovers were not affected by the NOL suspension rules.
For taxable years beginning in 2008 and 2009, California suspended the NOL carryover deduction. Taxpayers continued to compute and carryover their NOL during the suspension period. However, taxpayers with a net business income of less than $500,000 or with disaster loss carryovers were not affected by the NOL suspension rules.
The carryover period for any NOL or NOL carryover, for which a deduction is disallowed because of the 2008-2011 suspension, are extended by:
- One year for losses incurred in taxable years beginning on or after January 1, 2010, and before January 1, 2011.
- Two years for losses incurred in taxable years beginning before January 1, 2010,
- Three years for losses incurred in taxable years beginning before January 1, 2009.
- Four years for losses incurred in taxable years beginning before January 1, 2008.
For more information, get FTB Legal Ruling 2011-04.
For NOLs incurred in taxable years beginning on or after January 1, 2008, California has extended the NOL carryover period from 10 taxable years to 20 taxable years following the year of the loss.
For taxable years that began in 2002 and 2003, California suspended the NOL carryover deduction. Taxpayers continued to compute and carryover an NOL during the suspension period. However, the deduction for disaster losses was not affected by the NOL suspension rules.
The carryover period for an NOL incurred in taxable years:
- Beginning before January 1, 2002, have been extended for two years.
- Beginning on or after January 1, 2002, and before January 1, 2003, have been extended for one year.
For more information, get FTB Legal Ruling 2011-4.
For taxable years beginning on or after January 1, 2004, the NOL carryover percentage is 100%. The NOL carryover percentage varies for NOLs incurred prior to January 1, 2004. See the chart on page 6 for more information.
Governor Declared Disasters
For taxable years beginning on or after January 1, 2014, and before January 1, 2024, taxpayers may deduct a disaster loss for any loss sustained in any city, county, or city and county in California that is proclaimed by the Governor to be in a state of emergency. For these Governor-only declared disasters, subsequent state legislation is not required to activate the disaster loss provisions. Any law that suspends, defers, reduces, or otherwise diminishes the deduction of an NOL shall not apply to an NOL attributable to these specified disaster losses. The President’s declaration continues to activate the disaster loss provisions. For a list of disasters declared by the President and/or the Governor, see the Declared Disasters list in Specific Line Instructions. For the most current listing of disasters that may have occurred after the finalization date of this publication, go to ftb.ca.gov and search for disaster loss for individuals. Get FTB Pub 1034, Disaster Loss How to Claim a State Tax Deduction, for more information.
NOL Carryback
For NOLs incurred in taxable years beginning on or after January 1, 2015, the carryback amount is 100% of the NOL. For more information, see Specific Line Instructions for Parts I, II, III and IV.
Nonbusiness losses:
You may deduct nonbusiness capital losses up to the amount of nonbusiness capital gains. You may not deduct any excess nonbusiness capital losses over nonbusiness capital gains.
Nonbusiness capital losses and gains are losses and gains from other than a trade or business. These include sales of stock, metals, and other appreciable assets as well as any recognized gain from the sale of your principal residence.
Business losses:
You may deduct business capital losses only up to the total of business capital gains and any nonbusiness capital gains that remain after deducting nonbusiness capital losses and other nonbusiness deductions.
NOL carryback general rule:
The taxpayers must first carry back the entire NOL incurred in 2018 to the preceding two years. Any loss not applied in the preceding two years can be carried forward up to 20 years. To determine the amount of NOL incurred in 2018 that can be carried back, complete Part IV, NOL Carryback, before completing Part I, Section A, lines 26-28 or Part I, Section B, lines 26-28.
Amended return for NOL carryback
Individuals, estates, and trusts claim the NOL carryback by amending the 2016 and/or 2017 tax returns.
For 2016, use Form 540X, Amended Individual Income Tax Return and amended Form 540, California Resident Income Tax Return; Form 540NR (Long or Short), California Nonresident or Part-Year Resident Income Tax Return; or Form 541, California Fiduciary Income Tax Return.
For 2017, use amended Form 540, Form 540NR (Long or Short) and attach Schedule X, California Explanation of Amended Return Changes, to these returns. Estates and trusts, use amended Form 541.
Note:
Individuals, estates and trusts claiming the NOL as a carryback in any of the previous two years, must first file the applicable 2018 tax return and attach the completed 2018 form FTB 3805V, Net Operating Loss (NOL) Computation and NOL and Disaster Loss Limitations - Individuals, Estates, and Trusts, to the tax return. After the 2018 tax return is filed, file an amended tax return for 2016 and/or 2017 to claim the NOL carryback deduction. For 2016 amended return, individuals will provide the following explanation on Form 540X, Part II, Explanation of Changes, line 5: “2018 NOL carryback deduction”. For 2017 amended return, individuals will check box f, NOL carryback, on Schedule X, California Explanation of Amended Return Changes, Part II, line 1 and provide the following explanation on Part II, line 2 “2018 NOL carryback deduction”. Estates and trusts provide the following explanation on a statement attached to the amended Form 541: “2018 NOL carryback deduction”.
Do not attach the 2018 form FTB 3805V to the 2016 or 2017 amended tax return. Attaching form FTB 3805V may delay processing of the amended tax return.
Election to waive/relinquish NOL carryback:
If the taxpayer would like to make the election to waive the two-year carryback period for an NOL incurred in 2018, check the box under Part I, Section C, Election to Waive Carryback.
By making the election, the taxpayer is electing to carry an NOL forward instead of carrying it back in previous two years. Once the election is made, it’s irrevocable.
If the taxpayer elects to waive the two-year carryback period and carry the NOL forward, enter the amount from line 25 on Part III, line 4, column (d) and column (h). If you have an NOL from more than one source/type, list each loss separately.
If you have an NOL or disaster loss from prior years (line 23), complete Part II and Part III, to determine the loss carryover to future years.
A. Purpose
Individuals, estates, or trusts use form FTB 3805V, to figure the current year NOL and to limit the NOL carryback/carryover and disaster loss deductions.
Corporations use form FTB 3805Q, Net Operating Loss (NOL) Computation and NOL and Disaster Loss Limitations — Corporations.
B. NOLs
NOLs and Disaster Losses
If your deductions for the year exceed your income, you may have an NOL carryback/carryover. The California NOL is generally figured the same way as the federal NOL. However under California law:
- Carryover/carryback periods and percentages vary with the type of California NOL. The tables on page 5 and page 6 show the types of NOLs available, a description, the taxable year the NOLs were incurred, the percentages and carryover/carryback periods for each type of loss.
- An NOL may be carried over to future years. No carrybacks are allowed for NOLs incurred in taxable years beginning before January 1, 2013. Note: California will allow NOLs incurred in taxable years beginning on or after January 1, 2013, to be carried back to each of the preceding two taxable years. For more information, see the NOL Carryback table on page 5.
- Prior to the 2014 taxable year, if you elected an NOL from an activity within the following areas or zones to offset income earned solely within those areas or zones:
- Enterprise Zone (EZ). Get FTB 3805Z, Enterprise Zone Business Booklet, for more information.
- Local Agency Military Base Recovery Area (LAMBRA). Get FTB 3807, Local Agency Military Base Recovery Area Business Booklet, for more information.
C. Nonresidents and Part-Year Residents
Do not complete Part I, Section A.
Full-Year Nonresidents:
Complete Part I, Section B, column (a) and column (b).
Part-Year Residents:
Complete Part I, Section B, column (a) through column (e).
NOL Carryover Computation
For taxable years beginning on or after January 1, 2002, the NOL carryover computation for the California taxable income of a nonresident or part-year resident is no longer limited by the amount of net operating loss from all sources. Only your California sourced income and losses are considered in determining if you have a California NOL.
Change of Residency to California
For taxable years beginning on or after January 1, 2002, if you have NOL carryovers and were a nonresident of California in prior years, the NOL carryovers must be restated as if you had been a California resident for all prior years.
Change of Residency from California
For taxable years beginning on or after January 1, 2002, if you have NOL carryovers and you become a nonresident of California, your NOL carryovers must be restated as if you had been a nonresident of California for all prior years.
If your residency status changes from the time you generate the NOL carryover to the time you apply the NOL deduction, you will need to recompute the NOL carryover amount. For more information, get FTB Pub. 1100, Taxation of Nonresidents and Individuals Who Change Residency.
Specific Line Instructions
Form FTB 3805V is divided into four parts:
- Part I: Computation of Current Year NOL.
- Part II: Determine Modified Taxable Income (MTI). MTI is the amount of your taxable income that can be offset by your prior years’ NOL carryover.
- Part III: NOL Carryover and Disaster Loss Carryover Limitations.
- Part IV: NOL Carryback.
Part I – Current Year NOL
Use Part I to figure your current year NOL, if any, to carry back to the preceding two years or to carry over to future years.
If you have losses from more than one source and/or more than one type, it may be necessary to compute the allowable NOL carryover for each loss separately.
If you do not have a current year NOL, skip Part I and go to Part II.
Section A – California Residents
Line 3 - Estates or trusts, enter the amount from your 2018 Form 541, line 20a or Form 109, line 9.
Line 8 - Enter deductions that are not related to a trade or business and are not related to your employment (such as taxes, medical expenses, alimony, charitable contributions, and your contributions to individual retirement plans). If you do not itemize your deductions, your nonbusiness deductions include the standard deduction. A casualty loss is considered a “business expense” regardless of whether it is connected with a trade or business; do not include it as a nonbusiness deduction.
Line 9 - Enter income that is not related to a trade or business (such as dividends, pensions, annuities, income from an endowment, or interest earned on investments).
Line 11 and Line 12 - You may subtract nonbusiness deductions only from nonbusiness income, including any nonbusiness capital gains that remain after deducting nonbusiness capital losses. If your nonbusiness deductions are larger than your nonbusiness income, you may not deduct the excess.
Line 16 - You may deduct business capital losses only up to the total of business capital gains and any nonbusiness capital gains that remain after deducting nonbusiness capital losses and other nonbusiness deductions.
Line 23 - Enter the amount of your prior year NOL and disaster loss carryover from your 2017 form FTB 3805V, Part III, line 5 and line 6.
Line 28 - Go to Part III, Current Year NOLs, line 4, to record your 2018 NOL carryover to 2019. Complete line 4, column (d) and column (h), for each type of loss that you incurred. See Part IV, line 3, column (c) and column (i) for each type of loss that the Individuals, estates, and trusts incurred.
Section B – Nonresidents and Part-Year Residents
Full-Year Nonresidents:
Complete Part I, Section B, column (a) and column (b).
Part-Year Residents:
Complete Part I, Section B, column (a) through column (e).
Enter the number of days during the year you were a California resident:
Enter the number of days during the year you were a nonresident:
Complete column (a), line 1 through line 25 as if you were a California resident for the entire year.
Line 1 – Enter the amount from 2018 Long Form 540NR, line 17.
Line 2 – Enter the amount from 2018 Long Form 540NR, line 18.
Line 3a – If negative, use brackets. If positive, enter -0- here and on line 25. Complete Part II and Part III if you have a carryover from prior years.
Line 18 – If you do not have a loss on Schedule D (540NR), line 4 worksheet for nonresidents and part‑year residents, skip line 18 through 21 and enter on line 22 the amount from line 17.
Complete column (b), line 1 through line 25 if you were a nonresident for the entire year.
Line 1 – Enter the amount from 2018 Long Form 540NR, line 32.
Line 2 – Enter the amount from 2018 Schedule CA (540NR), Part IV, line 4.
Complete columns (c) and (d), line 1 through line 25 using the dates of transactions. If the dates are unknown because they were not specifically reported to you, then you will need to prorate the amounts. For column (c), multiply the amount in column (a) by the number of days you were a resident divided by 365 days. For column (d), multiply the amount in column B by the number of days you were a nonresident divided by 365 days.
Column (e), line 25, Enter the current year NOL on line 25. California will allow NOLs to be carried back to each of the preceding two taxable years.
Line 28 – Go to Part III, Current Year NOLs, line 4, to record your 2018 NOL carryover to 2019. Complete line 4, column (d) and column (h), for each type of loss that you incurred. See Part IV, line 3, column (c) and column (i) for each type of loss that the Individuals, estates, and trusts incurred.
Part II – Modified Taxable Income (MTI)
Use this part if:
- You are carrying over an NOL from years prior to 2018.
- You are carrying over a disaster loss from years prior to 2018.
- You have an unused 2018 disaster loss to carry over.
The purpose of this part is to figure your MTI. You must make certain modifications to your taxable income to determine how much you can carry over to next year. Your carryover to next year is the excess of your NOL deduction over your MTI.
Use this part to determine what your 2018 income (loss) was before taking any NOL carryover disaster loss, or disaster loss carryover deductions. This adjusted amount is called your MTI.
Line 1 – Form 540 filers: Subtract 2018 Form 540, line 18 from Form 540, line 17. If negative, use brackets.
Form 541 filers: Subtract 2018 Form 541, line 18 from Form 541, line 17. If negative, use brackets.
Long Form 540NR filers: Subtract 2018 Schedule CA (540NR), Part IV, line 4 from Schedule CA (540NR), Part IV, line 1. If negative, use brackets.
Line 2 – Form 540 filers: Enter as a positive number the net capital loss deduction from your 2018 Schedule D (540), line 9 or Schedule D (541), line 10.
Long Form 540NR filers: Enter your net capital loss from your 2018 Schedule CA (540NR), Part II, line 13, column E, determined in accordance with Schedule D (540NR).
Line 3 – Form 540 filers: Enter as a positive number the disaster loss carryover deduction from your 2018 Schedule CA (540), Part I, line 21b, column B or Form 541, line 15a.
Long Form 540NR filers: Enter the disaster loss carryover deduction amount from your 2018 Schedule CA (540NR), Part II, line 21, column E.
Line 4 – Form 540 filers: Enter as a positive number the NOL carryover deduction from your 2018 Schedule CA (540), Part I, line 21d, column B or Form 541, line 15a.
Long Form 540NR filers: Enter the NOL carryover deduction amount from your 2018 Schedule CA (540NR), Part II, line 21, column E.
Line 5 – Enter as a positive number the adjustments to itemized deductions, used to figure your federal NOL carryover. For more information, see federal Publication 536, Table 1, Worksheet for NOL Carryover.
Part III – Limitations
Keep a copy of form FTB 3805V with your records until you use all losses or they expire. Use this section to:
- Figure the NOL and disaster loss deduction actually taken in 2018 and the total disaster losses and NOL to be carried over to future years.
- Keep track of the expiration and limitations of any unused carryovers.
Nonresidents or Part-Year Residents: If you were a nonresident or part-year resident during the year, get FTB Pub. 1100, for more information.
When to use an NOL carryover – Use your NOLs and disaster losses in the order the losses were incurred. There is no requirement to deduct NOL carryovers, before disaster loss carryovers.
Line 1 – Enter the MTI from Part II, line 6. This is the maximum NOL carryover deduction you are allowed for 2018. NOL carryover amounts in excess of MTI may be eligible for carryover to 2019. See General Information B, NOLs.
Line 2
Column (a) – Enter the years, earliest first, the loss was incurred.
Column (b) – If the loss is from a new business or eligible small business, enter the SIC Code for the new business or eligible small business from the Standard Industrial Classification Manual.
If this is a farming enterprise, enter the agricultural activity code from federal Schedule F.
If the loss is from a pass-through entity, such as a partnership, S corporation, or limited liability company (LLC), enter the partnership’s FEIN, the California corporation number, or the LLC’s California Secretary of State file number from Schedules K-1 (100S, 565, or 568).
If the loss is due to a disaster, enter the disaster code from the list of declared disasters.
Declared Disasters:
| Year | Code | Event |
|---|---|---|
| 2018 | 106 | Holy Fire (Orange and Riverside Counties) 08/18* |
| 2018 | 105 | River, Ranch & Steele Fires (Lake, Mendocino, and Napa Counties) 07/18* |
| 2018 | 104 | Ferguson Fire (Mariposa County) 07/18* |
| 2018 | 103 | Carr Fire (Shasta County) 07/18* |
| 2018 | 102 | Cranston Fire (Riverside County) 07/18* |
| 2018 | 101 | Monsoonal Rainstorm (San Bernardino County) 07/18* |
| 2018 | 100 | Holiday Fire (Santa Barbara County) 07/18* |
| 2018 | 99 | West Fire (San Diego County) 07/18* |
| 2018 | 98 | Klamathlon Fire (Siskiyou County) 07/18* |
| 2018 | 97 | Pawnee Fire (Lake County) 06/18* |
| 2018 | 96 | March Winter Storms (Amador, Fresno, Kern, Mariposa, Merced, Stanislaus, Tulare, and Tuolumne Counties) 03/18* |
| 2018 | 95 | Southern California Mud Slides (Ventura and Santa Barbara Counties) 01/18* |
| 2017 | 94 | Lilac Fire (San Diego County) 12/17* |
| 2017 | 93 | Creek & Rye Fires (Los Angeles County) 12/17* |
| 2017 | 92 | Thomas Fire (Ventura and Santa Barbara Counties) 12/17* |
| 2017 | 91 | Severe Winter Storms and Snowmelt (Inyo and Mono Counties) 10/17* |
| 2017 | 90 | Solano County Atlas Fire (Solano County) 10/17* |
| 2017 | 89 | Cherokee, LaPorte, Sulphur, Potter, Cascade, Lobo & Canyon Fires (Butte, Lake, Mendocino, Nevada, and Orange Counties) 10/17* |
| 2017 | 88 | Tubbs, Atlas & Multiple Other Fires (Napa, Sonoma, and Yuba Counties) 10/17* |
| 2017 | 87 | Railroad, Pier, Mission & Peak Fires (Madera, Mariposa, Tulare Counties) 08/17 & 09/17* |
| 2017 | 86 | La Tuna Fire (Los Angeles County) 09/17* |
| 2017 | 85 | Ponderosa Fire (Butte County) 08/17* |
| 2017 | 84 | Helena Fire (Trinity County) 08/17* |
| 2016 | 83 | Siskiyou County Rainstorm (Siskiyou County) 12/16* (declared 08/17) |
| 2017 | 82 | San Bernardino County Rainstorm (SanBernardino County) 07/17* |
| 2017 | 81 | Modoc County Fires (Modoc County) 07/17* |
| 2017 | 80 | Detwiler Fire (Mariposa County) 07/17* |
| 2017 | 79 | Alamo & Whittier Fires (Santa Barbara County) 07/17* |
| 2017 | 78 | Wall Fire (Butte County) 07/17* |
| 2017 | 77.1 | February Winter Storms ( Alameda, Amador, Alpine, Butte, Calaveras, Colusa, Del Norte, El Dorado, Fresno, Glenn, Humboldt, Kern, Kings, Lake, Lassen, Los Angeles, Marin, Mariposa, Mendocino, Merced, Modoc, Mono, Monterey, Napa, Nevada,Placer,Plumas, Riverside, Sacramento, San Benito, San Benardino, San Diego, San Joaquin, San Luis Obispo, San Mateo, Santa Barbara, Santa Clara, Santa Cruz, Shasta, Sierra, Siskiyou, Sonoma, Stanislaus, Sutter, Tehama, Trinity, Tuolumne, Ventura, Yolo, and Yuba counties) 02/17* |
| 2017 | 77 | January Winter Storms (Alameda, Alpine, Butte, Calaveras, Contra Costa, El Dorado, Fresno, Humboldt, Inyo, Kern, Kings, Lake, Lassen, Los Angeles, Madera, Marin, Mendocino, Merced, Modoc, Mono, Monterey, Napa, Nevada, Orange, Placer, Plumas, Riverside, Sacramento, San Benito, San Bernardino, San Diego, San Francisco, San Luis Obispo, San Mateo, Santa Barbara, Santa Clara, Santa Cruz, Shasta, Sierra, Siskiyou, Solano, Sonoma, Stanislaus, Sutter, Tehama, Trinity, Tulare, Tuolumne, Ventura, Yolo, and Yuba counties) 01/17* |
| 2016 | 76 | December Winter Storms (Del Norte,Humboldt, Mendocino, Shasta, Santa Cruz, and Trinity counties ) 12/16* |
| 2016 | 75 | Blue Cut Fire (San Bernardino County) 08/16* |
| 2016 | 74 | Clayton Fire (Lake County) 08/16* |
| 2016 | 73 | Chimney Fire (San Luis Obispo County) 08/16* |
| 2016 | 72 | Soberanes Fire (Monterey County) 07/16* |
| 2016 | 71 | Sand Fire (Los Angeles County) 07/16* |
| 2016 | 70 | Erskine Fire (Kern County) 06/16* |
| 2015 | 69 | City of Carlsbad Rainstorms (San Diego County) 12/15* |
| 2015 | 68 | Inyo, Kern, and Los Angeles Counties Rainstorms 10/15* |
| 2015 | 67 | Valley Fire (Lake and Napa Counties) 09/15* |
| 2015 | 66 | Butte Fire (Amador and Calaveras Counties) 09/15* |
| 2015 | 65 | Imperial, Kern, Los Angeles, Riverside, San Bernardino, and San Diego Counties Severe Storms 07/15* |
| 2015 | 64 | Lake and Trinity Counties Wildfires 07/15* |
| 2015 | 63 | Butte, El Dorado, Humboldt, Lake, Madera, Napa, Nevada, Sacramento, San Bernardino, San Diego, Shasta, Solano, Tulare, Tuolumne, and Yolo Counties Wildfires 06/15* |
| 2015 | 62 | Santa Barbara County Oil Spill 05/15* |
| 2015 | 61 | Humboldt, Mendocino, and Siskiyou Counties Severe Rainstorms 02/15* |
| 2015 | 60 | Mono County Wildfire 02/15* |
| 2014 | 59 | Severe Winter Storms (Alameda, Contra Costa, Del Norte, Humboldt, Lake, Los Angeles, Marin, Mendocino, Monterey, Orange, San Francisco, San Mateo, Santa Clara, Shasta, Sonoma, Tehama, Ventura, and Yolo Counties) 11/14* |
| 2014 | 58 | King and Boles Wildfires (El Dorado and Siskiyou Counties) 09/14* |
| 2014 | 57 | Napa, Solano, and Sonoma Counties Earthquake 08/14 to 09/14* |
| 2014 | 56 | Siskiyou County Wildfires 08/14* |
| 2014 | 55 | Northern California Wildfires (Amador, Butte, El Dorado, Humboldt, Lassen, Madera, Mariposa, Mendocino, Modoc, Shasta, and Siskiyou Counties) 07/14* |
| 2014 | 54 | San Diego County Wildfires 05/14*** |
| 2014 | 53 | Los Angeles County Severe Rainstorms 02/14* |
| 2013 | 52 | Tuolumne, Mariposa, and San Francisco Counties Rim Fire 08/13 to 10/13** |
| 2011 | 51 | Los Angeles and San Bernardino County Severe Winds 11/11*** |
| 2011 | 50 | Santa Cruz County Severe Storms 03/11*** |
| 2011 | 49 | Mendocino County Tsunami Wave Surge 03/11 |
| 2011 | 48 | Del Norte and Santa Cruz County Tsunami Wave Surge 03/11** |
| 2011 2010 |
47 | Severe Winter Storms, Flooding, Debris and Mud Flows 12/10, 01/11** |
| 2010 | 46 | San Bruno Explosion |
| 2010 | 45 | Kern County Wildfires |
| 2010 | 44 | CA Winter Storms, 01/10, 02/10 |
| 2009 | 43 | Los Angeles, Monterey, Placer County Wildfires |
| 2010 | 42 | Baja California (Imperial County) Earthquake |
| 2010 | 41 | Humboldt County Earthquake |
| 2009 | 40 | Santa Barbara Wildfires |
| 2008 | 39 | Southern California Wildfires 10/08, 11/08 |
| 2008 | 38 | Humboldt County Wildfire |
| 2008 | 37 | California Wildfires 2008 |
| 2007 | 36 | Riverside County Winds |
| 2008 2007 |
35 | Inyo Complex fire |
| 2007 | 34 | Southern California Wildfires |
| 2007 | 33 | Santa Barbara and Ventura County Fires |
| 2007 | 32 | El Dorado County Wildfires |
| 2007 | 31 | California Severe Freeze: 01/07 |
| 2006 | 30 | Riverside and Ventura County Wildfires |
| 2006 | 29 | San Bernardino County Wildfires |
| 2006 | 28 | Northern California flooding, mudslides, and landslides 03/06 to 04/06 |
| 2006 2005 |
27 | Northern California flooding, mudslides, and landslides 12/05 to 01/06 |
| 2004 | 26 | Shasta County WildFires |
| 2005 2004 |
25 | Southern California flooding, debris flows, and mudslides |
| 2004 | 24 | San Joaquin Levee Break |
| 2003 | 23 | San Simeon Earthquake (expired) **** |
| 2003 | 22 | Southern California Fires and other related casualties (expired) **** |
NOTES:
* For taxable years beginning on or after January 1, 2014, and before January 1, 2024, taxpayers may deduct a disaster loss for Governor declared disasters. For these Governor declared disasters, subsequent state legislation is not required to activate the disaster loss provisions. Any law that suspends, defers, reduces, or otherwise diminishes the deduction of a NOL shall not apply to a NOL attributable to these specified disaster losses. For more information, see R&TC Section 17207.14 or the NOL Carryover table.
** Carryover period and percentage are limited to the NOL rules. No special state legislation was enacted.
*** The Santa Cruz County Severe Storms (occurred in March 2011); the Los Angeles and San Bernardino County Severe Winds (occurred in November 2011); and the San Diego County Wildfires (occurred in May 2014); disaster loss deductions are allowed at 100% in the year the loss was incurred or taxpayers can elect to deduct the disaster loss in the prior year return under IRC Section 165(i). Any provision of law that suspends, defers, reduces, or otherwise diminishes the deduction of an NOL does not apply to an NOL attributable to these four counties. See R&TC Sections 17207.11, 17207.12, and 17207.13 for more information.
If the Santa Cruz County Severe Storms, the Los Angeles and San Bernardino County Severe Winds disaster loss deduction creates an NOL (whether in the year of the loss or the prior year), the applicable NOL carryforward rule for the taxable year the NOL was created would apply. The NOL can be carried over for 20 years.
If the San Diego County Wildfires disaster loss deduction creates an NOL (whether in the year of the loss or the prior year), the applicable NOL carryback and carryforward rules for the taxable year the NOL was created would apply. The taxpayer must carryback the NOL attributable to the disaster loss for two years or elect to carryforward the NOL for 20 years.
**** Individuals, estates, and trusts that elected to deduct the disaster loss in the prior year under IRC Section 165(i), the final year to deduct the disaster loss carryover was last year. Individuals, estates, and trusts that did not elect IRC Section 165(i), the final year to deduct the disaster loss carryover is this year.
Column (c) – Enter the type of NOL from the NOL Carryover table on page 6. If using an economic development area (EDA) NOL, get the applicable form for the NOL type.
Column (d) – Enter the Current Year NOL amount related to the Year of loss you entered in column (a) on the same line. If you are a resident, this is the amount from your FTB 3805V, Part I, Section A, line 25. If you are a nonresident or part-year resident, this is the amount from Part I, Section B, line 25.
Column (e) – Enter the amount from your 2017 form FTB 3805V, Part III, column (h). You should have already applied the applicable percentage to any remaining disaster loss carryover. See General Information B, NOLs for more information.
Column (f) – Enter the smaller of the amount in column (e) or the balance in column (g). If column (g) of the previous line has been reduced to zero, your remaining NOL carryover may be eligible for carryover to 2019. See General Information B, NOLs.
Column (g) – Subtract column (f) from the balance in column (g) of the previous line and enter the result.
Column (h) – Subtract the amount in column (f) from the amount in column (e) and enter the result. After the initial five year disaster loss carryover, apply the applicable percentage to any remaining disaster loss carryover. See General Information B, NOLs for more information.
Current Year NOLs
If a disaster loss occurs between the date of the publication and the end of the taxable year, go to ftb.ca.gov and search for disaster loss for individuals, for the updated disaster chart. Then follow the line 3 instructions.
Line 3 – Current Year Disaster Loss
If you deduct the current year disaster loss on the current year tax return (did not elect IRC Section 165(i)), use line 3 to claim your 2018 disaster loss in the current taxable year.
Column (b) – Enter the disaster loss code.
Column (d) – Enter your 2018 disaster loss from Part I, line 3b.
Column (f) – Enter the smaller of the amount in column (d) or the balance in column (g) of the previous line.
Column (h) – Subtract the amount in column (f) from the amount in column (d) and enter the result in column (h). Any remaining disaster loss amount would create an NOL for that taxable year. If the disaster loss deduction creates an NOL in the year of the loss, the applicable NOL carryback and carryforward rules for the taxable year the NOL was created would apply. The taxpayer must carryback the 2018 NOL attributable to the disaster loss for two years or elect to waive the carryback period and carryforward the NOL for 20 years.
The taxpayer computes the NOL carryback in Part IV or makes the election to waive the carryback period and carryforward the NOL in Part I, Section C. If the taxpayer still has remaining disaster NOL after applying the two-year carryback, replace the amount in column (h) with the disaster NOL carryover amount from Part IV, line 3, column (i).
However, if you elected under IRC Section 165 (i) to claim your 2018 disaster loss on your 2017 return and had a remaining disaster loss amount after the disaster loss deduction, the remaining disaster loss amount would create an NOL to which the applicable NOL carryback and carryforward rules for the taxable year the NOL was created would apply. You must carryback the remaining NOL attributable to the disaster loss for two years or elect to waive the carryback period and carryforward the NOL for 20 years. If you elected to waive the two year carryback period and carry the NOL forward, enter the remaining disaster loss on your 2018 form FTB 3805V in Part III, line 2, column (e).
Line 4 – If you have a current year NOL from more than one source/type, list each loss separately.
If you operate one or more new businesses and one or more eligible small businesses, the following rules apply. Determine the amount of the loss attributable to the new business(es) and to the eligible small business(es). Then take the NOL in the following order:
- The new business NOL.
- The eligible small business NOL.
- Any remaining NOL (treat as an NOL under the general rules).
Column (b) and Column (c) – See the instructions for line 2. Do not enter Current Year Disaster NOLs on line 4.
Line 5 – NOL carryover – Total the carryover amounts from column (h) that are NOT the result of a disaster loss.
Part IV – NOL Carryback
Line 3
General rule: The 2018 NOL must be carried back to the second preceding taxable year before the loss year. Any loss not used in the second preceding taxable year is then carried to the first preceding taxable year. Any loss not applied in the two preceding years is carried forward.
Column (b) – If the loss is from a new business or eligible small business, enter the SIC Code for the new business or eligible small business from the Standard Industrial Classification Manual.
If this is a farming enterprise, enter the agricultural activity code from federal Schedule F.
If the loss is from a pass-through entity, such as a partnership, S corporation, or limited liability company (LLC), enter the partnership’s FEIN, the California corporation number, or the LLC’s California Secretary of State file number from Schedules K-1 (100S, 565, or 568).
If the loss is due to a disaster, enter the disaster code from the list of Declared Disasters on pages 3 and 4.
Column (d) – If you are a resident, enter the Current year NOL amount from Part I, Section A, line 25. If you are a nonresident or part-year resident, enter the amount from Part I, Section B, line 25, column (e).
Column (e) – Enter the amount from line 3, column (d) or line 1, whichever is less. This is the amount of the 2018 NOL carryback used for 2016. Also, enter this amount on the 2016 Form 540X, line 2e and on the 2016 amended schedules/return: Schedule CA (540), line 21(d); Schedule CA (540NR), line 21(d); or Form 541, line 15a. If the NOL carryback is attributable to a disaster loss, enter this amount on Schedule CA (540), line 21(b) or Schedule CA (540NR), line 21(b).
If the current year NOL is comprised of more than one type of loss, list each loss separately. To compute the amount of taxable income available for offset by the NOL carryback, reduce the amount on line 1, 2016 taxable income, by the amount of column (e) carryback used for the first type of loss and all subsequent types of losses. The total amount of NOL carryback used in column (e) should not exceed the 2016 taxable income from line 1.
Column (f) – Subtract column (e) from column (d).
Column (g) – Enter the amount from line 3, column (f) or line 2, whichever is less. This is the amount of 2018 NOL carryback used for 2017. Also, enter this amount on the 2017 amended schedules/return: Schedule CA (540), line 21(d); Schedule CA (540NR), line 21(d); or Form 541, line 15a. If the NOL carryback is attributable to a disaster loss, enter this amount on Schedule CA (540), line 21(b) or Schedule CA (540NR), line 21(b).
If the current year NOL is comprised of more than one type of loss, list each loss separately. To compute the amount of taxable income available for offset by the NOL carryback, reduce the amount on line 2, 2017 taxable income, by the amount of column (g) carryback used for the first type of loss and all subsequent types of losses. The total amount of NOL carryback used in column (g) should not exceed the 2017 taxable income from line 2.
Column (h) – Subtract column (g) from column (f).
Column (i) – Subtract the sum of column (e) and column (g) from column (d).
NOL Carryback
| Type of NOL and Description | Taxable Year NOL Incurred | NOL Carried Back shall not exceed | Carryback Period |
|---|---|---|---|
General (GEN), New Business (NB), and Eligible Small Business (ESB) For more information, see R&TC Section 17276.20 and get FTB Legal Ruling 2011-04 (see Situation 3). NOL attributable to a qualified disaster loss (DIS) |
On or after 01/01/2013 and before 01/01/2014 | 50% | 2 Years |
| On or after 01/01/2014 and before 01/01/2015 | 75% | 2 Years | |
| On or after 01/01/2015 | 100% | 2 Years |
NOL Carryover
| Type of NOL and Description | Taxable Year NOL Incurred | NOL Carried Over | Carryover Period* |
|---|---|---|---|
| General Available as a result of a loss incurred in years after 1986 and allowed under R&TC Section 17276.20. Does not include losses incurred from activities that qualify as a new business, an eligible small business, an EZ, LARZ, LAMBRA, TTA, or disaster loss. |
On or after 01/01/2008 |
100% | 20 Years |
| 2004‐2007 | 100% | 10 Years | |
| 2002‐2003 | 60% | Expired | |
| 2000‐2001 | 55% | Expired | |
| 1987‐1999 | None | Expired | |
Disaster Losses If the loss qualifies under IRC Section 165(i), the taxpayer may elect to deduct the loss from the previous year’s income. If the taxpayer made this election, see Part III, Current Year NOLs, line 3 and federal Form 4684, Casualties and Thefts, instructions for when the election must be filed. If special legislation is enacted under the R&TC, 100% of the excess loss may be carried over for up to five years. If any excess loss remains after the five year period, 50% of that remaining loss may be carried over for up to ten additional taxable years for losses incurred in any taxable year beginning before January 1, 2000; 55% for losses incurred in any taxable year beginning on or after January 1, 2000, and before January 1, 2002; 60% for losses incurred in any taxable year beginning on or after January 1, 2002, and before January 1, 2004; or 100% for losses incurred in any taxable year beginning on or after January 1, 2004. The following rules would apply if state legislation is enacted; or the President declared an area a major disaster; or the Governor declared an area a major disaster for taxable years beginning on after January 1, 2014: A taxpayer can claim 100% of the disaster loss deduction in the year the loss was incurred, or make an election under IRC Section 165(i) to claim the disaster loss deduction against the previous year’s income. For taxable years beginning on or after January 1, 2011, if the disaster loss deduction creates an NOL (whether in the year of the loss or the prior year), the applicable NOL carryforward rule for the taxable year the NOL was created would apply. The NOL can be carried over for 20 years. See Specific Line Instructions for more information. For taxable years beginning on or after January 1, 2013, if the disaster loss deduction creates an NOL (whether in the year of the loss or the prior year), the applicable NOL carryback and carryforward rules for the taxable year the NOL was created would apply. The taxpayer must carryback the NOL attributable to the disaster loss for two years or elect to carryforward the NOL for 20 years. See NOL Carryback Table and Specific Line Instructions for more information. |
See “Declared Disasters” list on pages 3 and 4 |
||
| Prior to 01/01/2011 | 100% | First 5 Years 10 Years Thereafter |
|
| On or after 01/01/2011 | See Description | See Description | |
New Business New Business means any trade or business that first commenced in California on or after January 1, 1994. 100% of an NOL may be carried over, but only to the extent of the net loss from the new business. If a taxpayer’s NOL exceeds the net loss from the new business, the excess may be carried over as a general NOL. If a taxpayer acquires assets of an existing trade or business which is doing business in California, the trade or business thereafter conducted by the taxpayer or related persons (IRC Sections 267 or 318) is not a new business if the fair market value (FMV) of the acquired assets exceeds 20% of the FMV of the total assets of the trade or business. If a taxpayer or related person has been engaged in a trade or business in California within the preceding 36 months and thereafter commences an additional trade or business in California, the additional trade or business qualifies as a new business only if the activity is classified under a different division of the Standard Industrial Classification (SIC) Manual, 1987 Edition. Business activities conducted by the taxpayer or related persons wholly outside California are disregarded in determining whether the trade or business conducted within California is a new business. The term “new business’’ includes any taxpayer engaged in biopharmaceutical activities or other biotechnology activities described in Codes 2833 to 2836 of the SIC Manual, 1987 Edition. It also includes any taxpayer that has not received regulatory approval for any product from the United States Food and Drug Administration. See R&TC Section 17276.20(f)(7)(A) for more information. |
On or after 01/01/2008 | 100% | 20 Years |
| On or after 01/01/2000* and before 01/01/2008 | 100% For the first three years of business | 10 Years | |
| On or after 01/01/1994 and before 01/01/2000 | |||
| Year of business | |||
| Year 1 | None | Expired | |
| Year 2 | None | Expired | |
| Year 3 | None | Expired | |
Eligible Small Business An ESB NOL is an NOL incurred in a trade or business activity that has gross receipts, less returns and allowances, of less than $1 million during the taxable year. 100% of an ESB NOL may be carried over, but only to the extent of the net loss from the eligible small business. If a taxpayer’s NOL exceeds the net loss from an eligible small business, the excess may be carried over as a general NOL. Taxpayers should use the same SIC Code tests described in the "New Business NOL," above, to group trade or business activities for the eligible small business NOL. |
On or after 01/01/2008 |
100% | 20 Years |
| On or after 01/01/2000* and before 01/01/2008 | 100% | 10 Years | |
| On or after 01/01/1994 and before 01/01/2000 | None | Expired |
* For NB or ESB NOL incurred on or after 01/01/2000 and before 01/01/2004, the carryover period has expired.
Note: For GEN, NB, or ESB NOL incurred on or after 01/01/2004 and before 01/01/2005, 2018 is the last taxable year to claim the NOL carryover deduction.